Homeowners are being warned that collection of the new Local Property Tax will be strictly enforced and that any unpaid taxes, plus late payment interest, will have to cleared before their property can be legally sold or transferred.

The warning came as the much-leaked details of the new tax were confirmed, with a standard rate of 0.18% applying to dwellings valued at under €1m and a so-called mansion tax of an additional 0.25% applying to any portion of the value that exceeds €1m.

That means owners of a house with the national average value of €175,000 will pay €315 annually, although, because the tax only comes into effect on Jul 1 next year, they will pay half that amount, or €157, in 2013.

That is still €57 more than the annual €100 Household Charge which the new tax is replacing, however, and there was worse news for owners of second homes, who will have to pay on the double next year as the €200 non-principal private residence charge will not be scrapped until 2014.

Finance Minister Michael Noonan insisted the tax, which aims to raise €250m next year and €500m annually thereafter, was “fair and progressive”.

“The Government is introducing [it] as a better alternative to increased taxes on income,” he said.

The Institute of Professional Auctioneers and Valuers was one of the many interest groups to disagree, arguing it would delay the recovery of the property market.

Chief executive Fintan McNamara said the tax was biased against city dwellers and was unfairly levied on landlords when tenants were the consumers of the services the tax was meant to fund.

Fianna Fáil finance spokesman Michael McGrath described it as the “wrong tax at the wrong time”.

“It will hit struggling homeowners at a time when they can least afford it,” he said.

David Hall of the Irish Mortgage Holders’ Association questioned the wisdom of trying to squeeze more money out of the 170,000 mortgage holders in arrears.

Mr Noonan took a hard line, however. “I view tax compliance as a core principle of our democracy. I want to reassure the vast majority of tax complaint citizens that the Revenue Commissioners will strictly enforce theLocal Property Tax,” he said.

Limited exemptions to the tax will apply but, contrary to early speculation, they do not include boom-time buyers who paid exorbitant stamp duty and are now in severe negative equity.

The emphasis instead is on people who are considering buying now as first-time buyers and people who buy newly built homes will be exempt until 2016.

Angela Keegan of property website MyHome.ie said however the tax would not boost but rather would destabilise the property market. Shealso warned that landlords may pass the cost on to tenants and force up rents.

The Campaign Against Household and & Water Taxes said it would intensify its campaign for a boycott of the tax. “By this action the Government has effectively declared war on the majority of people,” it said.

Campaign group, New Beginning, which supports distressed mortgage holders, said: “There is no reality in expecting people in significant mortgage arrears to pay this tax. It will be like trying to get blood out of a stone.”

Vincent P Martin, lawyer and founder of the New Beginning group which campaigns for debt settlement, said: “This new tax will further strangle an already squeezed Middle Ireland, ordinary people who are in deep negative equity, extreme mortgage distress, and who simply cannot pay.

“The property tax is not an alternative to increased income tax, it is just a means of extracting more money from people who cannot afford it.”

Bob Jordan, director of housing charity Threshold, said that the property tax, combined with widening of the PRSI tax net for rental income, could hit tenants and risk homelessness in a knock-on effect.